Sebi tells commodity bourses to set up investor protection and service funds

Commodity exchanges have to compulsorily set up investor protection and service funds, Sebi on Tuesday said.

Coming out with comprehensive guidelines, the markets regulator said commodity derivatives exchanges have to set up Investor Service Fund (ISF) for providing minimum facilities at various investor service centres.

Sebi said the Investor Protection Fund (IPF) of an exchange should have a maximum of five trustees. Out of the five, three should be public interest directors and a representative from Sebi-recognised any investor association. Besides, the exchange's compliance officer will be part of the trust.

"All the penalties levied and collected by the exchange, except for the settlement related penalties (including penalties from delivery default), shall be credited to the IPF," the regulator said.

The bourses can fix suitable compensation limits in consultation with the IPF trust.

However, the amount of compensation available against a single claim of an investor arising out of defaulter by a member broker should be at least Rs 1 lakh. The exchanges are required to maintain separate bank accounts for maintaining corpus of the IPF as well as the ISF.